NYMEX WTI Futures Reverses Lower

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures were mixed Thursday morning with the October West Texas Intermediate crude contract reversing off the prior day's one-month spot high and falling Thursday morning. Meanwhile, RBOB and ULSD futures advanced as traders scrutinized the latest batch of oil data while bracing for a string of hurricane that could have an impact on fuel supply.

In its latest weekly data, the American Petroleum Institute detailed an unexpected increase in crude oil inventories in the United States and stock draws for refined products. API's data for the weekended Sept. 1 showed a 2.8 million bbl crude stock build, marking the first increase after nine weekly stock draws. Gasoline supply declined by 2.5 million bbl while distillate fuel supply dropped by 603,000 bbl, the data shows.

The Energy Information Administration will release its corresponding weekly oil report at 11:00 AM ET Thursday after being delayed by a day due to the Labor Day holiday on Monday.

WTI futures eased as Hurricane Irma barreled through the Caribbean. Irma is one of a kind Category 5 hurricane that could disrupt oil shipments in the Atlantic Ocean destined for the United States just when the U.S. Gulf Coast is slowly recovering from the devastating impact of Hurricane Harvey.

Harvey hammered Texas and Louisiana nearly two weeks ago, knocking out key oil infrastructure, including 5.0 million bpd or 31% of U.S. refining capacity and 21% of offshore oil production.

As of Tuesday (9/5), 121,000 bpd or 7% of Gulf of Mexico oil production remained shut-in and 3.4 million bpd or 19% of U.S. refining capacity was still down, according to consulting firm IHS. The ports of Houston, Freeport and Corpus Christi have reopened, and Magellan and Explorer pipeline systems that move refined products out of the Houston area resumed operations, although trucks were still unable to operate due to flooding, IHS said.

While the impact to the industry from Harvey is easing, Irma hit the Caribbean Islands overnight with wind speeds up to 185 mph, leaving behind a trail of death and destruction. The most powerful hurricane is now taking aim at Florida, where it could make landfall this weekend, the U.S. National Hurricane Center said. Thursday morning, the eye of Hurricane Irma was moving west-northwest, off the northern coast of the Dominican Republic. Florida should expect Irma to make landfall as a Category 4 hurricane, NHC said.

Gasoline supply in Florida is vulnerable since the state gets product supply via barges shipped from the Gulf Coast, said Alan Levine, president of Powerhouse brokerage firm in Washington, D.C. Shortages of fuel were reported in Florida as gas stations struggled to keep up with demand from drivers filling their gas tanks to flee Irma's expected arrival this weekend.

State and local officials have ordered mandatory evacuation of some counties and cities including Miami Beach. Hurricanes Jose and Katia are on Irma's heels, with Katia developing in the Gulf of Mexico, said NHC, site of most of the U.S. offshore oil and gas production.

At last look, NYMEX October WTI crude futures fell 21cts to $48.95 bbl, reversing from Wednesday's one-month spot high of $49.42. November Brent crude on the ICE platform added 19cts to $54.39 bbl, off a better three-month spot high of $54.67. NYMEX October ULSD futures were 1.65cts higher at $1.7760 gallon while October RBOB futures edged up 0.43cts to $1.6776 gallon, but have since reversed down.

George Orwel can be reached at george.orwel@dtn.com